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Rapaport Weekly Market Comment

Jul 11, 2019 10:58 AM   By Rapaport News
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Diamond trade seasonally slow with concerns about weak demand and low profit. Oversupply continues despite drop in rough buying. Producers raising rough inventory as 1H sales slump and mine production remains steady. Alrosa 1H sales -32% to $1.8B. Kimberley Process reports 2018 global rough production +3% to $14.5B, volume -2% to 148.4M cts. Indian government raises gold import duty from 10% to 12.5% and keeps duty on polished diamonds at uncompetitive 8.25%. India’s introduction of separate import code for lab-grown rough diamonds is important step in differentiating natural from synthetic diamonds. Rapaport calls for implementation of such codes in US and other markets.

Fancies: Fancy shapes soft, reflecting slowdown in high-end demand. 3 to 8 ct., I-K, VS-SI1 moving better than rounds as dealers and consumers shift to lower price points. Well-known brands are paying best prices, as are buyers with specific requests. Ovals for fashion jewelry moving well, especially 1.50 and 2 ct., G-H, VS and H-K, SI2. Marquises and Princesses weak despite reduced manufacturing. US sustaining market for commercial-quality, medium-priced fancies under 1 ct. Chinese consumers seeking fancy shapes at better prices. Off-make, poorly cut fancies illiquid and hard to sell, even at very deep discounts.

United States: Polished trading slow, with some businesses closed for summer vacation. Weak sentiment among dealers in low-end melee as buyers push for deeper discounts. Better-quality G-H, VS-SI melee selling well. Fewer memo calls for single stones, in line with seasonal expectations. Steady orders for 1 ct., G-J, VS-I1 goods.

Belgium: Market quiet, supported by steady US demand. Dealer trading selective and price-sensitive. 0.30 to 1 ct., G-J SIs moving, but prices continue to soften. Large stones above 8 ct. weak. Fancy shapes doing okay, with nice-make ovals and pears selling well. Rough trading down as manufacturers continue to reduce factory output.

Israel: Fewer transactions, since many US wholesalers are on vacation and Far East customers remain cautious. Stable orders for 1 ct., G-J, VS-SI, RapSpec A3+ diamonds. Dealers expecting slow trading at least until September Hong Kong show. Shortage of fine-cut fancy shapes. Rough market sluggish, with manufacturers focused on reducing inventory.

India: Sentiment weak amid slow trading, tight liquidity and squeezed profits. Foreign buyers trying to take advantage by pushing for discounts. Domestic buyers cautious. Steady interest in 1 ct., G-J, SI goods. Strong gold demand supported jewelers in June, but rise in import duty to 12.5% expected to curb sales.

Hong Kong:
Weak mood in market as ongoing protests and trade war hurt wholesale and retail sales. Drop in tourist arrivals is affecting jewelers, and local consumer confidence is down. Investors looking for safe-haven assets amid economic uncertainty and are choosing gold over diamonds. Stable demand for 1 ct., D-H, VS, RapSpec A3+ engagement-ring diamonds.
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